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Simmers' CEO relocates to Canada
Brendan Ryan
Posted: Fri, 23 May 2008
[miningmx.com] -- GORDON MILLER - CEO of both Simmer & Jack (Simmers) and First Uranium - has relocated to Toronto, which effectively puts him in the same management camp as Lonmin CEO Brad Mills, who runs the company from London, where he lives, despite the fact that all of Lonmin's operations are in South Africa, to which he's an international commuter.
That situation is viewed as one of the reasons for Lonmin's underperformance against its peers since Mills was appointed early in 2004.
JPMorgan analysts Steve Shepherd and Allan Cooke have frequently criticised Lonmin over that. In a recent report the analysts comment: "Senior management resides in London and, in our view, this isn't appropriate - particularly in the current environment, where we believe leadership must be on the ground to be effective and to ensure quality frontline management and supervision.
"We have nagging concerns that, unless this issue is addressed, the chances are that the group's assets will continue to underperform their considerable potential."
All the operations run by Simmers and First Uranium are located in South Africa and Miller intends running them from even further afield in Canada. He's also had to stay out of South Africa for the past few months for tax reasons linked to his
new domicile.
Nigel Brunette, chairman of both Simmers and First Uranium, says: "The situation isn't ideal." But he cites a string of reasons why the new structure will work. He adds that, given the likely development and growth of both companies, it's inevitable that Miller will at some stage have to choose between running one or the other or move up to a "holding company" situation over both.
Says Brunette: "Obviously it's a sensitive issue with shareholders because Miller has a high profile and fills a big pair of shoes. But there's no way he's quietly gapping it. He remains totally committed financially to Simmers and the only shares he's sold have been to meet tax liabilities.
"Miller was also already spending an inordinate amount of time in Canada dealing with investors there. Once the tax situation is resolved, I doubt he'll be spending any less time in South Africa than he was before."
Brunette adds: "First Uranium does intend to
expand outside South Africa when it's able to and, like it or not, we do straddle both countries." First Uranium's primary listing is in Toronto and it's dual-listed on the JSE.
Brunette says the management changes announced in February this year were aimed at strengthening the overall structure, in particular the appointment of Syd Caddy as COO of First Uranium in place of Jim Fisher.
Caddy has extensive experience of the South African mining industry. Fisher has been moved to Toronto as vice-president, corporate development to explore expansion opportunities outside South Africa.
On the Simmers side, the COO is Deon van der Mescht, who was appointed in 2005 and has extensive experience of running South African marginal gold mines - in particular from his time at DRDGOLD.
Simmers and First Uranium have embarked on a number of ambitious growth projects that have been made more complex by the power situation in South Africa, plus the shortage
of sulphuric acid - an essential requirement in the metallurgical recovery process. On 21 April First Uranium announced it would build a sulphuric acid plant as well as a 30MW power generating plant.
Miller said at the time: "First Uranium is determined to start up its uranium recovery plants at Ezulwini Mine and MWS (Mine Waste Solutions tailings recovery project) on schedule. We don't intend to let the power situation or the ongoing increases in the cost of sulphur and sulphuric acid threaten our business or use them as an excuse to miss our project milestones."
On 17 April Simmers announced additional capital expenditure plans totalling R860m to be spent on its gold operations over the next six years.
Simmers is to spend R156m on a "mega float" plant at its Buffelsfontein (Buffels) mine that will treat surface waste rock and add 35 000oz/year of gold to its Buffels production profile for the next seven years.
Some R40m will be spent on a
3-D seismic survey at its Strathmore shaft, to be followed by R217m on a drilling programme over the next six years.
At its TGME gold operations in Mpumalanga, the plan is to spend R218m on building a BIOX treatment plant that will allow expansion of the underground mining operations. A further R232m will go to surface operations to develop a reserve of 540 000oz of gold to be treated by four heap leach pads.
* Ryan holds shares in Simmers.
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